Streamlined Sales Tax The Next Step Presented by David Kolb, - PowerPoint PPT Presentation

Streamlined Sales Tax The Next Step Presented by David Kolb, Indiana And Tim Bennett, Kentucky

• Location: • 100 Majestic Drive • Suite 400 • Westby, WI • Phone: 608-634-6060 • Employees: • Craig Johnson, Executive Director • Jody Bartels, IT Director • Bobbie Stellner, Executive Assistant • Pam Cook, Research Director 2

SSTGB Technical Responsibilities • Monitor problems and changes of the SST registration system • Maintain SSTGB web site, list servs, and ShareFile area • Website link to sign-up for list servs: http://www.streamlinedsalestax.org/index.php?page=JoinOurEmailList • Maintain Testing Central • Provide support to all states, taxpayers, CSPs and CASs 3

Streamlined State Status 07-01-17 WA ME MT ND MN OR VT NH ID WI SD MI MA NY WY CT RI IA PA NV NE NJ OH IN DE IL UT MD CA CO WV VA KS DC MO KY NC TN OK AZ NM AR SC GA AL MS AK TX LA HI FL Full Member States Non-sales tax states Associate Member States – flex to full Project states – Not Advisory Advisory States – Not Conforming Non-participating state 4

Volunteer Registrants and Dollars Collected Sellers could begin to register through SST • beginning in October 2005. Currently have nearly 3,500 active companies • volunteering to collect in all member states regardless of physical presence. Revenue collected through the 1st Quarter of • 2017 is about $2.9 billion 5

New Registration System • System Upgrade Implemented in 2016 • Simple and intuitive system • Single place for sellers to register (and update registrations) for all member states • Single unique identifying number used by all member states 6

New Registration System • System Upgrade (continued) • Improved instructions and communications with sellers (automated messages when registering) • Improved communications with states • States can query system at any time • Improved communications with CSPs • Easy to start/stop using CSPs • Easy to unregister if going out of business 7

Registration System Changes • Bulk Registrations (Used by CSPs) • Register single or multiple sellers at once • Update single or multiple registrations at once • Allowance indicators, out of business, etc. • Uniform schemas used by all CSPs • Non SST States ability to use the system • Technology Implementation Guide 8

Th The “ “Ce Certifi fied S Service P Provider” (CS (CSP) • Who or what is a CSP? SSUTA Definition • “An agent certified under the Agreement to perform all the seller's sales and use tax functions, other than the seller's obligation to remit tax on its own purchases.” CSP is a third party that provides “cradle • to grave” tax services 9

Th The “ “Ce Certifi fied S Service P Provider” (CS (CSP) • Requirements • Uses a Certified Automated System (CAS) • Taxability rules reviewed and approved by each state • Taxability matrix • Determines applicable state and local tax rates • Rate and jurisdiction database • Determines amount of tax due to each jurisdiction for each reporting period • Can generate and file returns required • Can make remittances required • Meet other requirements set by SSTGB 10

Th The “ “Ce Certifi fied S Service P Provider” (CS (CSP) • Requirements (cont’d) • Integrates it software with client’s order system • Agrees to file returns as required by the states • Agrees to protect the privacy of tax information • Enters into a contract with the SSTGB and agrees to comply with those terms 11

Current CSPs and CASs CSPs Accurate Tax Avalara Exactor ShipCompliant Sovos TaxCloud Taxometry 12

Current CASs Sovos 13

Certification Committee • Handles issues such as: • Minimum standards for certification of CSP candidates; • Testing of transmissions of SERS by the CSPs; • Maintaining the schemas for return transmissions and the registration system; • Coordinating quarterly testing of CSP systems to ensure correct tax rules and rates and boundaries are being used; and • Maintains Technology Implementation Guide to provide guidance to new SST states and new CSP candidates. 14

Certification Committee • Made up of representatives from all full member and associate member states. • Committee meets in person twice a year and on phone conferences as needed throughout the year. • Participation by all SST states is encouraged to address issues both with the CSPs and also to coordinate with other states. 15

Rate and Boundary Files • Current files for all states are available for down loading at http://www.streamlinedsalestax.org/index.php?page=alias-11 • Current file information is located at http://streamlinedsalestax.org/ratesandboundry/ • Uniform layout for all states 16

Simplified Electronic Return • SST States must accept Simplified Electronic Returns (SERs) from CSPs and non SST registrants • SERs are submitted thru Web Service utilizing XML schemas maintained by the FTA E-Standards group (formerly TIGERS) • Schemas can be found on the SSTGB web site • Technology tab 17

SST Reports § Compensation Report § Required only from Certified Service Providers § Audit Work File (Appendix F) § Required from Model 1 (CSP) and Model 2 seller § All reports are formatted as .csv § File specifications and requirements contained in Appendix F, Article V of SSUTA 18

Federal Remote Sales Tax Collection Legislation 19

Federal Legislation: Intent of the Proposals • Provide states and local governments with sales and use tax collection authority over businesses making remote sales into their taxing jurisdictions • Require states and local governments to enact a minimum level of simplification • Protect small businesses • Establish a framework for software providers to provide remote sellers what they need to calculate and file returns in states where they are remote sellers 20

The Marketplace Fairness Act • Passed Senate in 2013 • Re-introduced April 27, 2017 (S. 976) • Provides a state two options for gaining the Congressional authorization to require remote sellers to collect sales tax: § SSUTA member states have to provide 180 days notice that they will exercise authority under the Act; § Non-SSUTA members must comply with minimum simplification requirements. 21

The Marketplace Fairness Act • The minimum simplification requirements include: § Central administration of state and local taxes; § One audit per state; § Uniform sales and use tax base among all state and local jurisdictions; § Uniform sourcing rules; § Information on the taxability of products and services; § State must provide software, free of charge, capable of calculating sales tax due on remote sales and filing returns; • Small seller exception of $1M in remote sales • One year delayed effective date 22

The Remote Transactions Parity Act • Introduced April 27, 2017(H.R. 2193) § Bi-partisan support in House • Provides states with two options for gaining Congressional authorization, similar to the MFA • Includes the minimum simplification requirements contained in the MFA, plus additional protections for remote sellers and certified software providers 23

The Remote Transactions Parity Act • Additional Protections include: § If a remote seller uses a certified software provider, audits must go through that provider and not the seller; § Software must include integration, set-up and maintenance; § Remote sellers with less than $5M of gross receipts in the taxable year may not be audited, except in cases of fraud; § A mandatory 3 year statute of limitations for assessments; § The state must provide a taxability and exemption table; § The state must provide rates and boundary database; § Central registration system 24

Online Sales Simplification Act (Goodlatte Proposal – Not Introduced) • Hybrid origin sourcing • Remote seller collects at destination rate • Destination rate is limited to one rate per state • Tax base (e.g., taxability) determined by origin state laws • Remittance by remote seller is to origin state • Origin state remits to clearinghouse • Clearinghouse remits to destination state 25

Online Sales Simplification Act (Goodlatte Proposal) • Concerns: • Tax parity is not achieved • Taxation without representation • Steps on State (and local) sovereignty • Tax increase • Additional taxing regime 26

Tim Bennett Tim.Bennett@ky.gov 502-564-5170 Ext 48913 David Kolb dkolb@dor.in.us 317-234-5529 27